WEBVTT 1 00:06:00.550 --> 00:06:00.983 Good morning. 2 00:06:01.673 --> 00:06:05.677 I call this meeting of the Portland City Council Committee of the Whole to order. 3 00:06:05.822 --> 00:06:09.555 It is Wednesday, October 8th, 2026, at 9:30 AM. 4 00:06:10.805 --> 00:06:12.538 Rebecca, will you please call the roll? 5 00:06:13.370 --> 00:06:13.819 Good morning. 6 00:06:14.557 --> 00:06:14.910 Clark? 7 00:06:15.680 --> 00:06:15.807 Here. 8 00:06:16.641 --> 00:06:16.865 Green? 9 00:06:17.379 --> 00:06:17.507 Here. 10 00:06:18.165 --> 00:06:18.533 Zimmerman? 11 00:06:19.863 --> 00:06:20.151 Avalos? 12 00:06:20.425 --> 00:06:20.713 Present. 13 00:06:21.947 --> 00:06:22.285 Dunphy? 14 00:06:22.588 --> 00:06:22.701 Here. 15 00:06:23.375 --> 00:06:23.678 Smith? 16 00:06:24.192 --> 00:06:24.512 Here. 17 00:06:25.074 --> 00:06:25.523 Pirtle-Guiney? 18 00:06:26.740 --> 00:06:27.045 Ryan? 19 00:06:28.279 --> 00:06:28.809 Koyama Lane? 20 00:06:30.235 --> 00:06:30.668 Murillo? 21 00:06:31.310 --> 00:06:31.437 Here. 22 00:06:32.208 --> 00:06:32.704 Novick? 23 00:06:32.752 --> 00:06:32.865 Here. 24 00:06:33.410 --> 00:06:33.778 Canal? 25 00:06:35.326 --> 00:06:35.391 Here. 26 00:06:35.584 --> 00:06:37.401 Christopher, will you please read the statement of conduct? 27 00:06:38.319 --> 00:06:40.908 Welcome to the meeting of the Finance and Governance Committee of the Whole. 28 00:06:40.973 --> 00:06:51.834 To testify before this committee in person or virtually, you must sign up in advance on the committee agenda at www.portland.gov/council/agenda/committee-whole or by calling 311. 29 00:06:51.930 --> 00:06:54.213 Information on engaging with the committee can be found at this link. 30 00:06:54.536 --> 00:06:57.418 Registration for virtual testimony closes 1 hour prior to the meeting. 31 00:06:57.514 --> 00:07:00.170 In-person testifiers must sign up before the agenda item is heard. 32 00:07:00.543 --> 00:07:05.439 If public testimony will be taken on an item, individuals may testify for 3 minutes unless the Chair states otherwise. 33 00:07:05.552 --> 00:07:07.336 Your microphone will be muted when your time is over. 34 00:07:07.800 --> 00:07:08.620 The Chair preserves order. 35 00:07:08.685 --> 00:07:15.317 Disruptive conduct such as shouting, refusing to conclude your testimony when your time is up, or interrupting others' testimony or committee deliberations will not be allowed. 36 00:07:16.009 --> 00:07:17.711 If you cause a disruption, a warning will be given. 37 00:07:18.079 --> 00:07:19.975 Further disruption will result in ejection from the meeting. 38 00:07:20.168 --> 00:07:22.689 Anyone who fails to leave once ejected is subject to arrest for trespass. 39 00:07:23.074 --> 00:07:25.596 Additionally, the committee may take a short recess and reconvene virtually. 40 00:07:25.934 --> 00:07:27.973 Your testimony should address the matter being considered. 41 00:07:28.038 --> 00:07:30.012 When testifying, State your name for the record. 42 00:07:30.269 --> 00:07:32.610 If you're a lobbyist, identify the organization you represent. 43 00:07:32.771 --> 00:07:35.322 Virtual testifiers should unmute themselves when the clerk calls your name. 44 00:07:35.482 --> 00:07:35.754 Thank you. 45 00:07:36.716 --> 00:07:37.952 Thank you both. 46 00:07:39.026 --> 00:07:55.629 Colleagues, today at the Committee of the Whole, we have a chair's update as per usual, and then we have a single item on the agenda, which is the amended business license law code to include new compensation ratios and increase the CEO pay ratio surtax and gross receipts exemption amount, amend Code Sections 702, 400, and 500. 47 00:07:56.591 --> 00:08:00.153 We have now gotten to over 40 folks signed up to testify. 48 00:08:00.362 --> 00:08:04.961 I believe that still means we'll have enough time to hear everybody without shortening at all. 49 00:08:05.490 --> 00:08:14.545 But that does mean that depending on the way that the conversation goes with City Council, well, Committee of the Whole today, we may not finish this item today and we may have to carry it over to next week. 50 00:08:15.507 --> 00:08:17.286 But we, that's the council part of it. 51 00:08:17.334 --> 00:08:18.697 The testimony will still be today. 52 00:08:19.033 --> 00:08:21.358 So just wanted to flag that so that people are aware. 53 00:08:22.303 --> 00:08:26.968 All right, Rebecca, could you please call item 1? 54 00:08:27.449 --> 00:08:29.002 Item 1, committee chair updates. 55 00:08:30.514 --> 00:08:38.583 All right, well, we have a Chair's Update today as per usual, and everybody's got a copy and it's also getting posted if it's not online. 56 00:08:38.648 --> 00:08:50.157 Next week is the Fall TAO, and as we heard yesterday in the work session, we have split that into, well, there are 3 legislative items related to that. 57 00:08:50.738 --> 00:08:58.145 The TAO, the Technical Adjustment Ordinance itself, the business license tax policy that was previewed yesterday, and then the budget calendar that was also previewed yesterday. 58 00:08:58.196 --> 00:09:10.581 Although it says confirmed that we are doing that, um, broader conversation on street renaming code 17.93, which is the system by which we rename street renaming, that may not have enough time to, to actually be heard. 59 00:09:10.629 --> 00:09:12.408 It's confirmed for being on the agenda. 60 00:09:13.274 --> 00:09:21.447 Um, the other things that I think, uh, may be of interest to folks, we have a bunch of appointments on October 21st with the Home Forward board being first on that list. 61 00:09:21.927 --> 00:09:25.885 Um, and then the rest of the appointments have now been bundled on November 18th. 62 00:09:26.575 --> 00:09:32.658 Um, The last thing that I think was not confirmed last week is the span of control and management layers oversight hearing. 63 00:09:33.092 --> 00:09:35.019 That's currently on December 16th. 64 00:09:35.163 --> 00:09:38.375 Depending on when the auditor's report is ready, it might get moved to December 10th. 65 00:09:38.471 --> 00:09:40.783 Those 2 are fungible. 66 00:09:40.976 --> 00:09:45.071 Everything on the second page of unscheduled items is probably January and beyond at this point. 67 00:09:45.456 --> 00:09:47.993 But I am— if something gets filed, we'll do our best. 68 00:09:49.230 --> 00:09:52.135 And everything else you've pretty much seen before, but is on record. 69 00:09:52.697 --> 00:09:57.057 So I will, um, I will not belabor that point. 70 00:09:57.105 --> 00:10:01.337 Any questions on this before I go to Chair Avalos for her update on the Housing and Permitting Committee? 71 00:10:04.527 --> 00:10:06.374 All right, I'll pass it over to Chair Avalos. 72 00:10:08.461 --> 00:10:09.426 Thank you, Chair Kanal. 73 00:10:10.405 --> 00:10:17.011 So, um, yeah, I am excited to give you just a brief update on the last quarter of what we have been up to. 74 00:10:17.546 --> 00:10:28.153 We've covered a pretty wide range of issues over the last several months, from things like housing production and tenant stability to permit homelessness oversight, and long-term housing strategy. 75 00:10:29.371 --> 00:10:43.534 So in July, we received an annual report on North and Northeast neighborhood housing strategy and had a substantive conversation about displacement, affordability, homeownership, and whether those investments are reaching the Black Portlanders they were originally intended to serve. 76 00:10:44.447 --> 00:10:51.947 We also held a 90-minute public oversight discussion with Portland Solutions and Urban Alchemy in response to concerns that had been raised about shelter operations. 77 00:10:52.043 --> 00:10:53.389 That conversation is ongoing. 78 00:10:54.447 --> 00:11:01.610 Um, the goal there was to better understand how complaints are investigated, what accountability tools the city has, and what changes have been made in response. 79 00:11:02.253 --> 00:11:09.688 We also invited Metro Council President Juan Carlos Gonzalez to committee for a broader conversation about the future of regional housing and homelessness policy. 80 00:11:10.347 --> 00:11:22.619 Uh, I thought that was a really good opportunity for us to step outside of individual city programs and talk about how Portland Metro, the county, and the state can better align on our work and rebuild public trust around major housing investments. 81 00:11:23.279 --> 00:11:28.907 And the committee also proactively sent feedback to the Planning Commission as it worked on housing-related zoning changes. 82 00:11:30.519 --> 00:11:48.615 In August, we worked through a package of city foreclosure actions, advanced a new federal Section 108 housing financing tool, and invited housing and design experts to talk with us about single-stair buildings and what changes to building codes, zoning, and permitting might unlock additional mid-rise housing on smaller sites. 83 00:11:49.143 --> 00:11:57.852 And that is part of something I want this committee to keep doing, not just moving legislation, but bringing experts into the room to help us understand ideas that may shape future policy. 84 00:11:58.847 --> 00:12:15.418 In September, we heard the data center transparency resolution from Councilors Koyama Lane and Green and I, including testimony and expert perspectives, I guess, and everybody, 'cause everybody's a co-sponsor now, and expert perspectives on the infrastructure, energy, water, and public process questions raised by large data centers. 85 00:12:15.772 --> 00:12:27.846 We also brought the city's mandatory relocation assistance policy back to committee to look at how it is functioning today, how changes in state law have affected it, and whether our tenant protection tools are still accomplishing what council originally intended. 86 00:12:28.438 --> 00:12:34.067 We followed that discussion by hearing directly from Portland renters about the issues they believe this committee should be paying attention to. 87 00:12:35.332 --> 00:12:49.089 And then just this week, we had our first major committee briefing on the climate and health standards for existing buildings proposal, along with land use code changes required by recently adopted State law and changes necessary to continue the city's property tax exemption for low-income housing. 88 00:12:49.763 --> 00:12:52.102 Those were referred out of committee, so we'll hear those at council soon. 89 00:12:52.167 --> 00:12:55.373 And I suspect there might be some further conversation we'll have at council. 90 00:12:56.655 --> 00:13:01.272 The climate and health standards will return at our next meeting for public testimony and committee discussion. 91 00:13:02.009 --> 00:13:09.607 And then as far as the biggest body of work I want to update council on is the unified housing strategy and give you an update on that as that continues to move. 92 00:13:10.201 --> 00:13:19.168 So as you know, when council adopted UHS last year, the purpose was to stop treating Portland's housing work as a collection of disconnected programs and start building one coherent roadmap. 93 00:13:19.667 --> 00:13:27.441 And so that means looking across production, preservation, tenant stability, homeownership, social and non-market housing, funding, infrastructure, and permitting. 94 00:13:28.275 --> 00:13:34.894 And then actually making choices about what we prioritize, how we measure success, and where the city should lead versus where we need partners. 95 00:13:35.471 --> 00:13:41.335 So over the summer and early fall, we completed a series of deeper working sessions with practitioners and subject matter experts. 96 00:13:41.898 --> 00:13:49.320 Those conversations focused on preservation, production, long-term funding, and innovation, including the recommendations coming out of the social housing study. 97 00:13:49.929 --> 00:13:59.183 Participants were asked not just what they support, but what should rise to the top, what barriers exist to implementation, and what partnerships would actually be necessary to get the work done. 98 00:13:59.826 --> 00:14:20.753 And so now that the expert phase has been incredibly useful, we're already seeing some clear throughlines around stabilizing the affordable housing we already have, strategic acquisition of land and buildings, growing cooperative and community ownership, creating more sustainable housing funding, reducing infrastructure and permitting barriers, and then making sure that the different levels of government are actually pulling in the same direction. 99 00:14:21.364 --> 00:14:24.479 So now we're moving into the next phase, which is broader community engagement. 100 00:14:25.039 --> 00:14:33.437 And our first district-based community event is next Tuesday, October 13th at 6:00 PM in District 1 at the Rosewood Initiative. 101 00:14:34.256 --> 00:14:38.124 And there will be opportunities across the city for Portlanders to participate. 102 00:14:39.023 --> 00:14:45.201 If you Google Unified Housing Strategy, you'll find a page that PHB is hosting, and you'll see all of the district events. 103 00:14:45.249 --> 00:14:46.741 They're all happening within the next 2 weeks. 104 00:14:46.789 --> 00:14:51.941 So we'll be in District 1, 2, 3, and 4, I think in that order, or 1, 3, 2, and 4. 105 00:14:53.352 --> 00:14:56.835 And so these conversations have a different purpose than the expert sessions. 106 00:14:56.899 --> 00:15:10.993 Practitioners can help us understand implementation and feasibility, but the broader community needs to tell us what matters most in their lives and what housing stability actually means to them and where they think that the city should prioritize limited resources and to tell us what they think we're missing. 107 00:15:11.812 --> 00:15:18.908 And I'll end with one framing that from PHB that I think is particularly useful in how all of this work connects. 108 00:15:19.695 --> 00:15:23.355 The social housing study has given us lots of tools and ideas. 109 00:15:23.852 --> 00:15:30.578 The Keep Portland Housed ordinance that we passed a few months ago has put real investment and action behind housing stability and preservation and acquisition. 110 00:15:31.013 --> 00:15:32.105 And homelessness prevention. 111 00:15:32.618 --> 00:15:37.644 And now the Unified Housing Strategy is the roadmap that connects those efforts and gives us a long-term direction. 112 00:15:37.773 --> 00:15:48.562 So that is ultimately what I want UHS to become, not another report that sits on a shelf, but the framework that council can use when we make housing policy, budget, land use, and investment decision— decisions over the coming years. 113 00:15:49.173 --> 00:15:53.203 So there is still a lot of work ahead, and the strategy is gonna come back to council as it develops. 114 00:15:53.653 --> 00:16:01.576 But I'm really encouraged by how much substance we have built over the last several months, and I'm excited that we're now opening the conversation up broadly to more Portlanders. 115 00:16:02.188 --> 00:16:11.611 So thank you, Vice Chair Green, all of the committee members, PHP in the SEDSA service area that does a lot of work with us, and just everyone who has spent time helping us build this work. 116 00:16:12.077 --> 00:16:14.134 That is my report for now, and happy to take questions. 117 00:16:14.649 --> 00:16:15.505 Thank you, Chair Avalos. 118 00:16:15.635 --> 00:16:18.639 If any colleagues would like to get in the queue and ask Chair Avalos a question, now's the chance. 119 00:16:22.792 --> 00:16:25.255 Seeing none, that'll conclude the chair's update for this week. 120 00:16:25.369 --> 00:16:25.774 Thank you. 121 00:16:26.649 --> 00:16:28.498 And Rebecca, could you please call item 2? 122 00:16:31.188 --> 00:16:40.783 Item 2, amend business license law code to include new compensation ratios and increase the CEO pay ratio surtax and gross receipts exemption amount. 123 00:16:41.169 --> 00:16:47.485 Amend Code Sections 7.02.400 and 7.02.500. 124 00:16:47.919 --> 00:16:50.110 Document number 2026-348. 125 00:16:51.735 --> 00:16:52.533 Thank you very much. 126 00:16:52.775 --> 00:17:03.052 I'm going to just pass this over to start with the 2 primary sponsors, Councilors Green and Murillo, and then we'll hear from the other co-sponsors and move into the presentation. 127 00:17:03.743 --> 00:17:07.912 Um, so with that, I'm not sure who would like to go first, but Councilors Green and Murillo, take it away. 128 00:17:08.634 --> 00:17:09.627 I, I'll kick us off here. 129 00:17:09.916 --> 00:17:11.327 Uh, thank you, Chair Kanal. 130 00:17:12.162 --> 00:17:19.378 Um, we've got a lot of folks signed up for testimony, we've got a formal presentation, so I'll keep my, my opening remarks fairly brief. 131 00:17:19.635 --> 00:17:24.415 I just want to provide some framing statements, and I'll hand it over to Councilor Morillo and the rest of the co-sponsors. 132 00:17:24.528 --> 00:17:31.830 But I just want to say that in the 2 years— the 20 months I've been in office, we've had 2 austerity budgets. 133 00:17:32.874 --> 00:17:37.624 We've had a declaration of fiscal crisis at the beginning of this calendar year. 134 00:17:38.394 --> 00:17:42.872 And that's not going to get much easier for the next 3 to 5 years. 135 00:17:43.226 --> 00:17:46.049 We're going to have a cuts budget for the next 3 to 5 years. 136 00:17:46.114 --> 00:18:00.971 And so I think as early as February, my office started asking and reaching out to the revenue department, the CFO's office to ask what would changing the pay ratio surtax look like for our revenue over time. 137 00:18:01.729 --> 00:18:16.508 And that's in the context of, if you look at the data, if you make your decisions based upon evidence, the Bureau of Economic Analysis publishes corporate profits after tax numbers on a quarterly basis. 138 00:18:16.571 --> 00:18:28.468 In the Q2 2026 numbers show that corporate profits after tax as a share of GDP is the highest on record going back to 1947. 139 00:18:29.484 --> 00:18:30.727 So I'm going to say that again. 140 00:18:32.291 --> 00:18:38.853 Large corporations have never been more profitable, even after taxes, in the United States of America than they are right now. 141 00:18:39.704 --> 00:18:42.856 And the other side of the coin, one might argue, well, how are they so profitable? 142 00:18:42.922 --> 00:18:44.674 Well, wages are the lowest on record. 143 00:18:45.218 --> 00:18:45.603 Okay. 144 00:18:45.747 --> 00:18:48.503 There's a distribution between profits and wages. 145 00:18:48.567 --> 00:18:49.770 And so those are the stakes. 146 00:18:50.635 --> 00:18:58.955 And, you know, the City of Portland obviously cannot determine sort of federal-level policy, but we are embedded in it. 147 00:18:59.067 --> 00:19:06.458 We are conditioned by the consequences of our, of, you know, federal government's failure to tax these corporations appropriately. 148 00:19:06.521 --> 00:19:13.289 And so we must lead, and we must ask the question of, are we going to continue to just exist within that world? 149 00:19:13.338 --> 00:19:14.785 Are we going to try to change it a little bit? 150 00:19:15.491 --> 00:19:21.982 It's not directly within our budget scope, but, you know, Portland Public Schools is closing 14 schools. 151 00:19:23.204 --> 00:19:35.480 Parents are upset, and they don't understand why it is that in a country where corporations have never been more profitable, their local leaders are saying there's simply nothing we can do about this. 152 00:19:35.994 --> 00:19:41.652 And so this measure while it doesn't solve all the problems, is an attempt to address that problem head-on. 153 00:19:42.567 --> 00:19:46.231 And we're gonna get into the particulars of it as we get into the presentation. 154 00:19:46.279 --> 00:19:50.423 But at this moment, I'd like to pass it over to Councilor Murillo, who is my chief co-sponsor on this. 155 00:19:50.551 --> 00:19:50.794 Thank you. 156 00:19:51.342 --> 00:19:53.115 Thank you, Councilor Green. 157 00:19:55.362 --> 00:20:11.804 I kind of wanna set the stage for the conversation here because when I've been talking with people, I think that it is incredibly difficult for us It's hard for us to imagine such large numbers and to imagine what it means for someone to be a billionaire or a trillionaire when we're having these conversations. 158 00:20:12.702 --> 00:20:19.748 It is something that is so unfathomable to most of us who have had to work every day that we can't even picture what that actually means tangibly. 159 00:20:20.519 --> 00:20:27.949 So in 1978, startups as a percentage of Portland area businesses have fallen by nearly half. 160 00:20:29.393 --> 00:20:40.976 Over that same period, CEO pay at the largest US corporations exploded by 1,094%, while a typical worker's pay grew only 26%. 161 00:20:41.057 --> 00:20:44.740 And if you want to check my math, you can look at the Economic Policy Institute. 162 00:20:44.788 --> 00:20:45.634 That's where that came from. 163 00:20:48.364 --> 00:20:58.685 You're going to hear this figure a lot today, but in the 1970s, CEOs of successful U.S. corporations made roughly 20 to 30 times more than their workers. 164 00:20:59.432 --> 00:21:08.667 Today, CEOs at the largest 350 US publicly owned firms make 290 more times than their average paid worker. 165 00:21:10.096 --> 00:21:22.009 And these modern tenfold increases in CEO median pay, median worker pay ratios typically exclude the outlier pay packages received by people like Elon Musk, who is now one of our first trillionaires. 166 00:21:23.002 --> 00:21:28.858 When we talk about business burdened by— businesses burdened by taxes, we need to qualify that statement. 167 00:21:29.195 --> 00:21:58.238 Small businesses for decades have been struggling through red tape, high taxes on thin margins, and token gestures and valorization by politicians with very few material gains, while at the same time mega corporations have never had it better, realizing incredible gains under Trump tax cuts, with studies finding that 10% of the benefits from President Trump's tax cuts flowed to just the top 5 executives, and no benefit went to the bottom 90% of workers in this country. 168 00:21:59.349 --> 00:22:08.066 This is a system that has created a trillionaire while schools are closing, TriMet buses are being cut, and people are quite literally dying on our streets. 169 00:22:10.007 --> 00:22:11.721 We could imagine a different world. 170 00:22:11.785 --> 00:22:19.762 We could imagine a society where we actually have state capacity, and some of the greatest times in this country were under governments that actually worked. 171 00:22:20.175 --> 00:22:26.930 Governments that delivered services and delivered on their promises and used the power of the state to uplift everyone instead of a select few. 172 00:22:27.652 --> 00:22:39.332 We can uplift 2/3 of small businesses in Portland today while also securing the future of beloved programs like violence prevention, parks programs, Portland Street Response, anything. 173 00:22:40.086 --> 00:22:46.982 We have engaged extensively with businesses, stakeholders, and the public, and the feedback we receive on this proposal is that It's common sense. 174 00:22:47.704 --> 00:22:48.682 That it's a no-brainer. 175 00:22:49.307 --> 00:22:52.673 We all know that small businesses are what make Portland great. 176 00:22:53.075 --> 00:22:59.790 They are the artists and the people who create the culture of our city, and they also need real relief. 177 00:23:00.432 --> 00:23:02.516 This proposal is a straightforward tax break. 178 00:23:02.949 --> 00:23:11.251 Small businesses are tired of having to go through complicated programs and the bureaucracy and apply for grants and wait 10,000 months to hear back. 179 00:23:11.669 --> 00:23:17.145 Under this policy, The tax relief applies automatically for 18,000 small businesses. 180 00:23:19.726 --> 00:23:29.925 We need to find a way to support our city services without doing that on the backs of working-class people by perpetually increasing fees that they pay and perpetually increasing the fees for small businesses. 181 00:23:30.538 --> 00:23:40.971 So why not use an existing policy that's been on the books for a decade to ask mega corporations that are thriving under Trump tax cuts in the wealthiest country in the world to pay a reasonable amount. 182 00:23:41.789 --> 00:23:49.608 And we have to talk about what a reasonable amount is, because again, in the 1970s, CEOs made 20 to 30 times more than their median worker. 183 00:23:50.202 --> 00:23:56.625 When polled most recently, most Americans think that CEOs should only make 5 to 10 times more than their median worker. 184 00:23:57.346 --> 00:24:03.512 But right now, they are making, on average, 300 times that of their median worker. 185 00:24:04.653 --> 00:24:08.634 Elon Musk makes 5,000 times that of his median worker. 186 00:24:09.229 --> 00:24:15.555 This problem is getting worse year after year, and our sense of what is reasonable is getting distorted over time. 187 00:24:16.951 --> 00:24:21.159 Modern-day CEO-to-medium-worker pay ratios of 300 to 1 are a choice. 188 00:24:21.993 --> 00:24:25.189 Increasing the ratio from 20 to 30 to 1 is a choice. 189 00:24:25.926 --> 00:24:30.391 Creating the first trillionaire with a pay ratio of over 5,000 to 1 is a choice. 190 00:24:31.162 --> 00:24:32.736 We can also choose a different path. 191 00:24:33.153 --> 00:24:36.188 We can build a city that delivers on its promises and services. 192 00:24:36.701 --> 00:24:47.605 We can deliver tax relief to 18,000 Portland small businesses, and we can do that while presenting a choice to the largest thriving corporations in the wealthiest nation in the world. 193 00:24:48.488 --> 00:24:54.974 You can either pay a small tax that represents a small, small fraction of the benefits you receive from doing business in Portland. 194 00:24:55.970 --> 00:25:03.838 Pick between increasing your median worker pay such that they can actually afford to live there, or you can decrease your own pay. 195 00:25:04.721 --> 00:25:10.246 And when we say decrease, we aren't asking for a CEO-to-worker pay ratio that we saw decades ago. 196 00:25:10.903 --> 00:25:18.997 Megacorporations could avoid this mild tax while maintaining a CEO-to-worker ratio that nearly doubles the ratio we saw in the 1970s. 197 00:25:19.799 --> 00:25:22.803 This is a common-sense policy that will uplift small businesses. 198 00:25:22.931 --> 00:25:24.393 It will uplift the working class. 199 00:25:24.698 --> 00:25:29.076 It will help us save some of the precious services that Portlanders are begging us to fight for. 200 00:25:29.846 --> 00:25:44.748 So I hope that we will, you know, go through this presentation, go through the facts, and that we will have the political courage to do what's right in this moment, because we can't keep producing budgets that are austerity for the poor and keep giving millions of our taxpayer dollars to the rich. 201 00:25:45.452 --> 00:25:47.616 Thank you, Councilor Morillo. 202 00:25:47.856 --> 00:25:49.907 And then I'm just going to go down the line. 203 00:25:50.517 --> 00:25:53.545 Councilor Koyama Lane, do you want to offer any remarks as a co-sponsor? 204 00:25:54.508 --> 00:25:54.861 Sure. 205 00:25:55.711 --> 00:26:01.631 I first want to thank my colleagues, Councilor Morillo, Councilor Green, for your vision and leadership on this ordinance. 206 00:26:01.742 --> 00:26:02.849 I'm proud to co-sponsor. 207 00:26:03.347 --> 00:26:16.309 Just last Friday, I was at a Better Portland small business event talking to small business owners, and it was a great conversation with many passionate, smart, kind business owners who care a lot about Portland. 208 00:26:17.128 --> 00:26:19.550 And I know it's, it's hard out there. 209 00:26:19.728 --> 00:26:23.509 For small businesses, it's always hard, and it's, it's particularly hard right now. 210 00:26:24.439 --> 00:26:26.843 I've taught for many years, everyone knows that. 211 00:26:26.923 --> 00:26:39.182 And so I— what that means is I've taught, um, many kids of small business owners in District 3, from Away Days Brewery to No Name Pho to Oblique Coffee Roasters to Greco Jewelry and more. 212 00:26:39.807 --> 00:26:59.266 And what I keep hearing out there is that our small business community is doing well despite the city, not because of the city, which is one reason that I'm very hopeful about this ordinance, because it would relieve business tax for 18,000 small businesses. 213 00:26:59.362 --> 00:27:00.194 That's huge. 214 00:27:01.204 --> 00:27:20.422 This is something we can do to provide some relief while we continue to work on other ways to make things easier for our small businesses, like streamlining, streamlining permitting, providing financial support like grants or fee waivers, and other connected issues like transportation and community and public safety. 215 00:27:21.239 --> 00:27:27.777 And I know that everyone up here cares about and supports and loves our small businesses at all of our different districts for many reasons. 216 00:27:27.825 --> 00:27:35.115 And one of those is also that— one that's really important is that small businesses keep money local, keep it in Portland. 217 00:27:35.421 --> 00:27:47.021 We know that a dollar is more likely to remain in each of our districts And multiply its impact when it's spent at a locally owned small business rather than at a chain or out-of-state company. 218 00:27:48.175 --> 00:27:51.396 And that's because of the local multiplier effect. 219 00:27:51.461 --> 00:27:53.352 And it's really interesting. 220 00:27:53.448 --> 00:27:55.707 If anyone wants to talk more about that later, we can talk about it. 221 00:27:56.443 --> 00:28:05.113 So I love that this fair share tax directly supports small businesses who we know put money directly back into our local economy and communities. 222 00:28:05.161 --> 00:28:05.257 Thank you. 223 00:28:05.873 --> 00:28:08.232 Thank you, Councilor. 224 00:28:08.314 --> 00:28:08.932 Councilor Avalos. 225 00:28:11.096 --> 00:28:11.665 Thank you so much. 226 00:28:13.109 --> 00:28:19.375 Yeah, um, I think what I want to start with today is just something that I hear when I'm knocking on doors constantly in East Portland. 227 00:28:19.890 --> 00:28:25.770 People are working hard, they're doing everything that they're supposed to do, and they're still struggling to get ahead. 228 00:28:26.270 --> 00:28:36.207 I knocked on one person's door a couple weeks ago, and the first thing that I that she said to me, um, was, I don't know much about city council other than I don't like y'all. 229 00:28:36.769 --> 00:28:38.582 And I was like, you know what, we get that a lot. 230 00:28:39.240 --> 00:28:44.167 Um, but I was like, but tell me why, you know, tell me why you specifically don't like your city council. 231 00:28:44.375 --> 00:28:49.881 And what she told me was what we all hear, that people are worried about affording their rent and their groceries. 232 00:28:49.929 --> 00:28:57.038 She said that she is going to school and doing everything right, paying her rent, and she only has $300 left in her paycheck. 233 00:28:57.392 --> 00:28:58.805 And now her bus is getting cut. 234 00:28:59.719 --> 00:29:01.950 And so this is what is at stake here. 235 00:29:02.463 --> 00:29:08.914 Small business owners are watching every single dollar, trying to figure out how to keep their doors open and keep their employees paid. 236 00:29:10.295 --> 00:29:16.730 And meanwhile, we're being told that the solution to Portland's economic challenges is to ask even less of the wealthiest corporations. 237 00:29:16.810 --> 00:29:18.415 And I fundamentally disagree. 238 00:29:19.122 --> 00:29:23.134 Because here's the question that I keep coming back to: who are we building this economy for? 239 00:29:23.230 --> 00:29:23.439 Thank you. 240 00:29:24.271 --> 00:29:27.653 The fair share tax is one way we can start answering that question differently. 241 00:29:28.438 --> 00:29:34.397 By providing those 18,000 small businesses with tax relief, we're saving them an average of $900 a year. 242 00:29:35.007 --> 00:29:44.459 And we're asking these large publicly traded corporations that are doing business in Portland, not necessarily headquartered here, with these enormous CEO-to-worker pay gaps to contribute more. 243 00:29:45.180 --> 00:29:54.038 And I want to emphasize something about those small businesses in East Portland, because many of them are immigrant-owned, they're BIPOC-owned businesses operating on incredibly tight margins. 244 00:29:54.471 --> 00:30:02.130 They're neighborhood restaurants and family businesses and local entrepreneurs who have invested everything they have into building something for themselves and their communities. 245 00:30:02.722 --> 00:30:08.507 $900 might be a rounding error to a multinational corporation, but to a neighborhood business, that's real money. 246 00:30:08.634 --> 00:30:09.403 That's a chance. 247 00:30:10.396 --> 00:30:18.969 At a time when we're struggling to fund the basic services that Portlanders rely on, we have an obligation to examine how we're generating revenue, not just how we're cutting spending. 248 00:30:19.625 --> 00:30:24.159 And I recognize that there are different revenue projections that we're, I'm sure, going to debate very soon. 249 00:30:24.415 --> 00:30:44.314 But uncertainty about that dollar amount should not stop us from having a much bigger conversation about fairness, because we cannot keep balancing our city's financial challenges on the backs of working people and small businesses while treating the wealthiest corporations as though they're— asking them to contribute more is somehow unreasonable. 250 00:30:44.377 --> 00:30:44.778 It's not. 251 00:30:45.643 --> 00:30:46.845 So I'm proud to be a co-sponsor. 252 00:30:46.941 --> 00:30:58.724 Thank you so much for the leadership of Councilors Green and Murillo, and I hope that my colleagues will approach this proposal with the same question that I'm asking, which is, how can we make sure that we're not Who are we asking to sacrifice and who can actually afford to contribute more? 253 00:30:58.821 --> 00:31:01.583 So that is what this tax is about, and I look forward to the conversation. 254 00:31:01.855 --> 00:31:02.176 Thank you. 255 00:31:03.365 --> 00:31:04.232 Thank you, Councilor Avalos. 256 00:31:05.630 --> 00:31:06.319 Councilor Dunphy. 257 00:31:07.780 --> 00:31:08.375 Well, thank you. 258 00:31:08.663 --> 00:31:10.976 You know, I'm proud to be a co-sponsor of this legislation. 259 00:31:11.875 --> 00:31:13.079 Portland is a small business town. 260 00:31:13.898 --> 00:31:17.559 9 Out of 10 employers in our city employ 10 or fewer employees. 261 00:31:18.474 --> 00:31:20.128 But those small businesses are struggling. 262 00:31:20.643 --> 00:31:25.589 They're suffering under the weight of inflation, the cost of operating your business, and including local taxes. 263 00:31:26.810 --> 00:31:33.220 As a former small business owner myself, I know firsthand how punishing Portland's business license tax can be on already tight margins. 264 00:31:33.990 --> 00:31:41.605 I'm co-sponsoring the Fair Share Tax because it's going to eliminate the tax for over 18,000 small businesses who make less than $500,000 per year. 265 00:31:42.311 --> 00:31:54.922 I cannot simply stand by and watch as we are losing beloved restaurants and bars and coffee shops, retailers and small neighborhood businesses that define Portland's identity while mega corporations suck billions of dollars out of our community. 266 00:31:55.707 --> 00:32:02.821 How many times have we heard about food cart— uh, food carts being kicked out of their, uh, spaces in order to build a fancy hotel that immediately fails? 267 00:32:03.720 --> 00:32:05.529 I don't care how well Starbucks is doing. 268 00:32:05.642 --> 00:32:07.773 I care about how well Parkrose Coffee is doing. 269 00:32:09.023 --> 00:32:13.911 Now is the exact right time to uplift those small businesses and give them the tax relief that they deserve. 270 00:32:14.457 --> 00:32:16.257 We have no cranes in the sky today. 271 00:32:16.803 --> 00:32:18.907 Megacorporations are not investing in Portland. 272 00:32:18.971 --> 00:32:23.470 But every single day, there are individuals still trying to open new businesses in Portland. 273 00:32:23.550 --> 00:32:32.249 And if we don't fight to preserve what we already have and create a path for success for the only people who are actually investing in our community, then there won't be a Portland to save. 274 00:32:32.426 --> 00:32:34.488 So I'm eager to get into testimony, so I'm going to leave it there. 275 00:32:36.869 --> 00:32:37.698 Thank you, Councilor Dunphy. 276 00:32:37.762 --> 00:32:42.518 So at this time, colleagues, I'm going to give an overview of what the policy does. 277 00:32:43.233 --> 00:32:47.705 And then we will move to 2 invited speakers, and then we'll move into public testimony. 278 00:32:47.753 --> 00:32:48.750 So I'll jump right in. 279 00:32:49.330 --> 00:32:51.920 I might move a little faster because I think we're running a bit behind time. 280 00:32:54.077 --> 00:32:55.799 Okay, I think you guys can see my screen. 281 00:32:55.896 --> 00:32:57.377 All right, fair share tax. 282 00:32:57.425 --> 00:32:57.844 What does it do? 283 00:32:58.551 --> 00:33:04.156 Okay, so colleagues, the policy has been carefully crafted to serve several purposes. 284 00:33:05.116 --> 00:33:08.748 The first is sort of address the great scourge of our time, which is inequality. 285 00:33:09.366 --> 00:33:10.690 Actually, the second great scourge of our time. 286 00:33:10.753 --> 00:33:12.157 First great scourge of our time is ICE. 287 00:33:14.304 --> 00:33:21.567 Addressing inequality between both high-income and lower-income households, as well as small and big businesses. 288 00:33:22.976 --> 00:33:34.548 We also have designed this to raise revenue to protect the city's core services and do so in a way that is a progressive tax structure rather than heap a larger share on those with the least ability to pay. 289 00:33:35.895 --> 00:33:38.032 And finally, we want to send a price signal. 290 00:33:38.080 --> 00:33:46.145 We want to send an incentive to create better business practices by discouraging exorbitant executive pay and encouraging higher wages. 291 00:33:47.366 --> 00:33:48.990 So those are the primary purposes of the tax. 292 00:33:49.455 --> 00:33:53.310 So what does it do? 293 00:33:53.503 --> 00:33:55.111 It does 2 broad things. 294 00:33:55.641 --> 00:34:16.724 First of all, it increases the business license tax exemption from $75,000 to $500,000 in gross receipts, which will result in, by our modeling and partnership with the Revenue Department, a tax exemption for 18,000 small businesses who will no longer have to pay the business license tax in the City of Portland. 295 00:34:17.221 --> 00:34:27.949 And the other part of it is then it changes the pay ratio surtax structure, which is something we've had on the books thanks to Councilor Novick's— then Commissioner Novick's leadership since 2016. 296 00:34:28.480 --> 00:34:39.324 It adds new brackets, and it affects the rates for approximately 405 large publicly traded corporations that have a Dodd-Frank reporting requirement for their CEO-to-pay ratio. 297 00:34:42.327 --> 00:34:43.023 Moving right along. 298 00:34:43.460 --> 00:34:49.126 So here we just want to contextualize this with some data on the business climate in Oregon. 299 00:34:50.550 --> 00:34:54.588 So what we know is that Portland small businesses are struggling. 300 00:34:56.221 --> 00:34:57.875 This is Bureau of Labor and Statistics data. 301 00:34:57.940 --> 00:35:02.932 So what this is showing is that more businesses are shuttering than new ones opening. 302 00:35:04.489 --> 00:35:08.947 Those closures outnumber openings by 6,000 during the first 9 months of 2025. 303 00:35:09.012 --> 00:35:15.336 And if you guys are in the small business, small business business in the city of Portland, then you know that. 304 00:35:15.577 --> 00:35:17.106 That's the thing you think about every single day. 305 00:35:18.393 --> 00:35:22.621 If you live in neighborhoods where you see a vacant storefront, You feel that, right? 306 00:35:24.050 --> 00:35:28.998 And so we have to let the data drive our policy. 307 00:35:29.817 --> 00:35:45.894 And what we see is that our local economy is becoming increasingly dominated by large multinational corporations that can take more market share and have a differential advantage relative to small businesses, which makes it really difficult to compete. 308 00:35:48.115 --> 00:35:48.900 So what are we gonna do here? 309 00:35:50.230 --> 00:35:50.809 What are the basics? 310 00:35:51.213 --> 00:35:55.467 So the change that we're proposing to the business license tax and the pay ratio does the following. 311 00:35:57.409 --> 00:36:05.153 It affects— so any business doing business in Portland, irrespective of where they're headquartered, pays the business license tax. 312 00:36:05.619 --> 00:36:17.800 So I think one of the things that you're gonna see, one of the kind of, I think, false talking points that you'll see throughout this debate is, This will just drive businesses out of Portland, especially these large corporations. 313 00:36:17.847 --> 00:36:20.032 Won't they just move to Tigard or Tualatin? 314 00:36:20.079 --> 00:36:22.184 Won't they just take their business out of Portland? 315 00:36:22.889 --> 00:36:35.670 And the answer to that is, if they were to move their business, say, let's say there's a Fortune 500 firm in Portland and then they moved it to Beaverton, unless they abandoned the Portland market, they still have to pay the tax, right? 316 00:36:36.152 --> 00:36:38.400 So Amazon.com pays the tax right now. 317 00:36:38.867 --> 00:36:42.472 They're not headquartered in Portland. 318 00:36:43.213 --> 00:36:43.552 Target. 319 00:36:44.438 --> 00:36:45.467 Target pays the tax. 320 00:36:45.871 --> 00:36:47.528 They're not headquartered in Portland. 321 00:36:47.577 --> 00:36:50.445 And if they were to pull all their stores out, they still have online retail, right? 322 00:36:51.121 --> 00:36:52.282 So that's the thing. 323 00:36:52.331 --> 00:36:54.780 So we actually have a sort of bulwark against tax flight. 324 00:36:56.487 --> 00:37:04.778 All those businesses are required to pay a business license tax of 2.6% on net income, but it's only those publicly traded corporations that have yes. 325 00:37:04.860 --> 00:37:08.320 CEO pay ratios that are exorbitant that pay this extra surtax. 326 00:37:10.427 --> 00:37:12.121 Currently, that's 100 to 1 or more. 327 00:37:14.135 --> 00:37:18.222 So what we're going to do is propose to raise that surtax. 328 00:37:18.579 --> 00:37:25.210 And right here we've got a table that shows essentially the first column would be the current surtax rate. 329 00:37:25.275 --> 00:37:43.934 You'll note that for Fortune 500— or I keep saying Fortune 500, but publicly traded corporations that have a 100 to 1 or up to a 250-to-1 CEO-to-pay ratio surtax or ratio will pay a surtax of 10% on the business license tax. 330 00:37:43.983 --> 00:37:49.742 So that takes it from 2.6% to an effective rate of 2.86%. 331 00:37:50.195 --> 00:37:53.036 That's currently ours, then sort of ratchets that up. 332 00:37:53.132 --> 00:38:09.782 And we're sort of saying, we're saying, look, not only are we going to start this impact earlier at 50-to-1, Once you get to 100 to 1 and up, we're just gonna tie the surtax to the rate at which you overpay your CEO relative to your median worker. 333 00:38:09.846 --> 00:38:11.628 So if it's 100 to 1, guess what? 334 00:38:11.677 --> 00:38:12.896 That's 100% surtax. 335 00:38:13.844 --> 00:38:15.884 If it's 250 to 1, guess what? 336 00:38:15.947 --> 00:38:17.650 That's a 250% surtax. 337 00:38:18.356 --> 00:38:28.423 And if you're 500 to 1 or greater, if you're the Elon Musks of the world, or if you're, you know, if you're CEO of Live Nation, you're going to pay a 500% surtax. 338 00:38:29.228 --> 00:38:31.081 And so that's not a 500% tax. 339 00:38:31.661 --> 00:38:33.528 This is just a percentage on a tax. 340 00:38:33.577 --> 00:38:36.981 So the, the column on the right-hand side just shows you the effective tax rate. 341 00:38:37.851 --> 00:38:40.306 Um, so that's what they would pay after the change. 342 00:38:42.563 --> 00:38:44.472 All right, so how does this all work? 343 00:38:45.766 --> 00:38:50.929 Um, we, we estimate that 18,405 small businesses would receive an exemption. 344 00:38:52.110 --> 00:38:56.809 97.8% Seeing taxes go to zero with an average saving of $900. 345 00:38:57.146 --> 00:39:01.302 And so folks will say, well, that's only $900, that's not, that's not a lot. 346 00:39:01.382 --> 00:39:08.938 But I'll remind folks that when we raised the BLT from 50 to 75, it wasn't a lot either, but it was meaningful and it was an important signal that we sent. 347 00:39:09.083 --> 00:39:13.367 I was proud to support that one too, and I thank you for your leadership, Councilor Zimmerman and Mr. Mayor. 348 00:39:14.393 --> 00:39:30.284 But $900 on average times 18,000 is about $14 million that stays in the economy, that stays in the private sector to spend on other things, increase wages, provide that Christmas bonus, pay that other fee that we just raised, right? 349 00:39:31.184 --> 00:39:35.952 So these things matter, and it's a net impact to the local economy of $14 million. 350 00:39:36.465 --> 00:39:50.882 By increasing the pay ratio surtax based upon, you know, the counterfactual of fiscal year 2024, We estimate with the revenue department that that would've produced an incremental increase of $72 million. 351 00:39:51.878 --> 00:40:06.811 Now, our city economist has done some analysis with the CFO to say, well, these are— this is a volatile income source, and then that extra income would fall on a few large corporations that could see their profits fluctuate with the stock market. 352 00:40:07.373 --> 00:40:16.675 And so applying some pretty conservative assumptions, You know, we can safely assume that an extra $33 million a year would be something that we would forecast going forward. 353 00:40:17.074 --> 00:40:19.784 That's still more money than we have today after we provided relief. 354 00:40:19.913 --> 00:40:23.150 So we'll get into that discussion, and it's a worthwhile discussion to have. 355 00:40:24.369 --> 00:40:29.306 And then we just talked yesterday about a BLT reserve policy. 356 00:40:30.684 --> 00:40:32.960 I think this pairs very well with that BLT reserve policy. 357 00:40:33.025 --> 00:40:36.103 So we can fill up that reserve very quickly once this tax goes into effect. 358 00:40:36.150 --> 00:40:36.295 Thank you. 359 00:40:36.875 --> 00:40:41.436 And we certainly wouldn't want to assume $72 million in our forward-looking budgeting. 360 00:40:42.759 --> 00:40:44.742 Okay, more context. 361 00:40:44.838 --> 00:40:52.699 So since Reagan, and Councilor Morillo, you got to this a little bit here, but CEO pay just skyrockets. 362 00:40:53.007 --> 00:40:58.682 You know, there's sort of Thatcherite Reaganomics stuff just basically juices up the power of the CEO. 363 00:40:59.150 --> 00:41:00.653 They pick the boards of the corporations. 364 00:41:00.702 --> 00:41:03.637 They give the board votes to give them exorbitant packages. 365 00:41:04.376 --> 00:41:13.657 They engage in stock buybacks, which then drives up their compensation packages, all at the same time that the effective tax rate or top marginal tax rates are going down. 366 00:41:14.766 --> 00:41:21.139 That tax cut has been used to purchase stocks back for the firm, which drives the CEO-pay ratio. 367 00:41:21.188 --> 00:41:26.711 So this is a deeply broken system that is driving inequality in America. 368 00:41:27.193 --> 00:41:40.494 And more recently, following Trump's 2016 election, before he took office, the signal of the stock market was Donald Trump's going to come in and cut taxes for the wealthiest in the United States. 369 00:41:41.056 --> 00:41:48.563 And so market participants anticipated that and started bidding up the price of stocks, and it basically went through his whole term. 370 00:41:49.130 --> 00:41:56.224 So the effect of that tax cut was to drive up stock prices, which drives up CEO compensation, which worsens inequality. 371 00:41:58.012 --> 00:42:04.739 And it's notable that these taxes on profits mainly impact the shareholders and the executives. 372 00:42:05.172 --> 00:42:08.030 So another thing you might hear is, won't this get passed on to consumers? 373 00:42:08.784 --> 00:42:20.313 Generally speaking, a profit on taxes, a profit on net income is borne by the executives and the shareholders 'cause the pricing decisions are made earlier in the production process. 374 00:42:22.833 --> 00:42:28.898 I already said that just now, but basically, you know, unlike a sales tax, these are generally not passed on. 375 00:42:29.411 --> 00:42:32.748 But I think the piece that's important here is I'm gonna use an example to make the point. 376 00:42:34.224 --> 00:42:45.036 Let's compare Starbucks with Parkrose Coffee, or hell, let's compare Starbucks with Dutch Bros Coffee, which Dutch Bros would pay some surtax on it, but not as much as Starbucks. 377 00:42:45.693 --> 00:42:49.815 So Starbucks said, you know what, we don't like a 15% tax on our profits. 378 00:42:50.023 --> 00:42:53.773 We're willing to leave profits on the table by just taking our ball and going home. 379 00:42:55.135 --> 00:43:03.724 They would then cede their market share to Dutch Bros, and they would cede their market share to Parkrose Coffee, which would then increase their sales and increase their profits. 380 00:43:04.365 --> 00:43:21.376 And so if you're a CEO that gets paid based upon your ability to deliver profits to your shareholders and increase shareholder value, then you would be in violation of your fiduciary responsibility by saying, I'm going to leave and stop doing business because I'm doing slightly less profits after taxes. 381 00:43:21.893 --> 00:43:23.235 And that's an important thing to keep in mind. 382 00:43:23.688 --> 00:43:32.771 If we're to believe that CEOs are paid so large because they are masters of the universe and they are impeccable allocators of capital, then they would never make such an error. 383 00:43:33.547 --> 00:43:33.693 Okay? 384 00:43:35.454 --> 00:43:35.599 All right. 385 00:43:35.648 --> 00:43:40.304 So just to make the point here, this creates an incentive too. 386 00:43:40.889 --> 00:43:45.686 So there's 3 options that we've sort of modeled here to reduce the pay ratio surtax. 387 00:43:47.034 --> 00:43:55.793 So the example here is the Starbucks CEO who makes 1,800 to 1, $31 million while the median worker makes $17,000 a year. 388 00:43:56.195 --> 00:43:57.574 Let's just sit with that for a second. 389 00:43:57.655 --> 00:43:58.713 Mm-hmm. 390 00:43:58.922 --> 00:44:04.777 This would be an effective tax of 15.6% if you assume $100 million in revenue. 391 00:44:06.927 --> 00:44:10.391 You could reduce it by paying workers enough to afford a 2-bedroom apartment. 392 00:44:10.873 --> 00:44:15.490 That would reduce your liability by $435,000. 393 00:44:15.668 --> 00:44:19.547 You're saving $435 by raising your workers' salaries. 394 00:44:20.478 --> 00:44:26.956 You could reduce the pay ratio to an average of a large— so just bring it to the average, which in the United States the average is 280 to 1. 395 00:44:27.871 --> 00:44:31.896 That would then also produce the savings for the firm of $435,000. 396 00:44:31.945 --> 00:44:32.137 Thank you. 397 00:44:33.067 --> 00:44:39.565 And then if you were just to reduce it to pre-Reagan levels of CEO compensation, the firm would become more profitable by $871,000. 398 00:44:41.710 --> 00:44:58.625 So the point here is that if we were to assume that CEOs are wizards and they're profit optimizers, then we have an opportunity to provide an incentive to increase the profits of these firms by reducing their CEO salaries and helping Portland out too. 399 00:45:01.012 --> 00:45:09.539 Research indicates that executive— excessive executive pay is associated with lower firm performance and lower worker morale. 400 00:45:09.925 --> 00:45:23.315 We don't allow applause or audible reactions from the audience, but nod your head if you feel like you've lost morale at your company when you heard that your CEO got paid more and you just got— your buddy got cut from the line. 401 00:45:23.364 --> 00:45:23.443